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ARTICLES
Japan's Population Crisis Just Got Even Worse by Micah McCartney: Japan’s declining population is a serious problem that needs to be addressed sooner than later. With their aging population and low birthrates, any solution will need revolve around increased immigration. The question is, “is Japan willing to do that?”. To date the answer has been no.
China’s Self-Strengthening Movement and Japan’s Meiji Restoration by Guanqiao Huang: In last month’s letter, I referenced Japan’s Meiji Restoration, a two-decade period of unprecedented economic, military, and cultural modernization. Around the same time, China underwent its own attempt to modernize, called the Self-Strengthening Movement. Unfortunately, it wasn’t attempted as wholeheartedly as the Meiji Restoration, which, although yielding improvements, weren't enough to protect Japan from the predatory impulses of the west.
Interview: Sarah C. Paine by Noah Smith: Professor Sarah C. Paine of the U.S. Naval War College discusses the current global geopolitical landscape, why the rules-based international order is so important, the war in Ukraine, a potential conflict over Taiwan, and U.S. military capabilities.
Delhi heat sends power demand soaring to record high by Cherylann Mollan: India’s capital recently broke several energy demand records. A rising population, prolonged heat wave, and the increased use of cooling devices has put unprecedented strain on India’s infrastructure.
This won’t be the last time you read about record energy demand in Asia. As emerging markets continue their outpaced growth, their standards of living will rise, too. As this happens, their need for energy and other natural resources will rise as well.
Global warming will increasingly have less to do with the demand of developed countries and more to do with that of developing countries. This means the world’s ability to develop more efficient technologies will be what determines how successful the fight against global warming is.
The Philippines, China & Escalation in the South China Sea by Daniel Ortwerth: Citing a Chinese map created in the early 1950s called The Nine Dash Line, China claims most of the South China Sea. Much of this territory is many hundreds of kilometers off its shores, close to the coasts of Vietnam, Malaysia, and the Philippines.
This article discusses how China’s increased belligerence towards the Philippines could potentially become a geopolitical flash point. Although the Philippines is no match for China, its mutual defense treaty with the U.S. increases the complexity of the issue. If China acts militarily to enforce its claim, and the U.S. stands firm by its alliance, a significant altercation could be the result.
The following three videos show the nuanced (and almost silly) measures that China and the Philippines have implemented to enforce their territorial claims: Video 1, Video 2, Video 3.
Asian Financial Crisis: Causes, Response, Lessons Learned - Investopedia: The Asian financial crisis began in July 1997 when Thailand became unable to defend its currency, leading to a rapid devaluation. This cascaded into a regional crisis as other Asian countries also saw their currencies fall in value while experiencing economic turmoil.
The crisis was caused by high levels of debt (borrowed in foreign currency), poor financial supervision, and imbalanced capital flows. The International Monetary Fund intervened to stabilize the affected economies with aid but imposed strict conditions for reform. The crisis led to severe recessions in some countries and prompted the restructuring of economies to avoid similar situations in the future.
Looking back, we can better appreciate the importance of being wary of the following: the interconnectedness of markets, asset bubbles, and especially high debt levels, particularly when borrowed in foreign currency. Why? Because when a country borrows funds in U.S. dollars, for example, and its currency falls by one-sixth of its previous value (as the Indonesian rupiah did, compared to the USD), the relative amount of debt that country owes balloons six-fold the previous amount. That is a serious problem!
The Plaza Accord - Investopedia: Great example of unintended consequences. The Plaza Accord was an agreement between the U.S., Japan, and Germany. The purpose was to weaken the American dollar, which had risen almost 50% between 1980 and 1985. As a result, the USD fell as much as 26% against the German and Japanese currencies.
Unfortunately, this led to a short-term shock to Japanese export-based industries. To mitigate this issue, Japan dramatically expanded its monetary and fiscal policy to boost its economy. As a result, assets rose dramatically in the late 1980s, creating an asset bubble in financial and real estate markets. When the bubble inevitably burst, Japan endured a “lost decade”. As mentioned a few months ago, the Japanese stock market only recently regained those previous bubble levels - three decades later.
NVIDIA CEO Jensen Huang at Stanford University: Technology is moving faster than ever. NVIDIA CEO Jensen Huang explains how, even though computing efficiency is increasing by a million times every decade, demand will surge by a trillion times. He also talks about NVIDIA’s latest microchip, which weighs an incredible 70 pounds and consists of 35,000 parts!
How the Century of Humiliation Influences China’s Ambitions Today by Tom Harper: China’s century of humiliation refers to the period from the First Opium War (1839–1842) to 1949, when it became The Republic of China. Although more than seven decades ago, this scar remains prominent and continues to influence Chinese policy. First and foremost, it has vowed to never endure subservience again. It also effectively uses this experience to commiserate and entice countries with similar histories to join Chinese initiatives, like its Belt and Road initiative.
How I Think About Debt by Morgan Housel: "As debt increases, you narrow the range of outcomes you can endure in life." I’d argue you could replace the word “debt” with “risk”, and it would apply equally well.
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